Natallia Smith

TruWealth Advice

This week, I attended a conference presented by Plan Australia. Here’s what I learned from their property market update.

During the past five years, Melbourne has seen a 32.1% growth in property values, with the median house value currently sitting at $681,000. Rental yield, the measurement of ongoing return on investment for a property, is now under 4% per annum.

Across the board, there has been a decrease in new real estate listings. Added to this, banks and lenders have tightened their lending criteria, particularly during the last twelve months. This has led to a noticeable decrease in approvals for residential and investment home loans.

Mortgage Stress

It’s generally accepted that mortgage stress exists when mortgage repayments are greater than 30% of your income. According to Plan Australia, approximately one million Australians are now in the position of experiencing mortgage stress. In Victoria, the median family income is $1759 per week, with median loan repayments reported as sitting at 32.2%.

Mortgage Deposits

Currently 12% of Australians purchase residential property with no deposit while 34% declare a deposit of less than 10%. On average, it takes ten years for a Melbournian to save the expected 20% deposit (at 15% savings rate).

First Home Owners

Interestingly, the first home owners market is higher than the average, currently sitting at 31% in Victoria.

Despite lending restrictions, difficulty in saving for deposits and increasing house prices, the Melbourne property market is still going strong due to the demand - over one million people moved to Melbourne during the last seven years.

For more information on property purchase, saving deposits and structuring your finances for lending purposes, contact TruWealth Advice on (03) 8648 6534.